Do Kwon, co-founder of Terraform Labs, appeared in a Manhattan court on January 2, 2024, pleading not guilty to multiple fraud charges linked to the collapse of the TerraUSD (UST) stablecoin, which resulted in a staggering $40 billion loss.

Kwon faces nine charges, including wire, securities, and commodities fraud, related to the dramatic decline of the LUNA and UST tokens. He was arrested in Montenegro in March 2023 while attempting to flee on a fake passport, leading to a legal battle between the US and South Korea over his extradition.

Kwon's appeal against extradition to the US was rejected by Montenegro's Constitutional Court on December 26, 2023, and he was subsequently extradited to the US on December 31.

Prosecutors allege that Kwon misled investors regarding the capabilities and adoption of the Terra blockchain, contributing to its catastrophic failure. The case is being led by the Manhattan US Attorney’s Office, known for successfully prosecuting FTX co-founder Sam Bankman-Fried.

In addition to the criminal charges, Kwon and Terraform Labs were found liable in a civil fraud case by the Securities and Exchange Commission (SEC), resulting in a $4.47 billion settlement, which led to Terraform's bankruptcy.

Kwon's attorney did not provide comments following the hearing, and a follow-up court conference is scheduled for January 8, 2024, potentially setting the stage for a significant trial in the crypto sector.